After all of the hard work and time you have put into your small gym business you owe it to yourself to maximize the value you get out of it when you sell it. Quite simply, the best time to sell your gym is when things are moving up. When it has gone beyond your expectations and is still going. That is the exit point that will give you the most satisfaction and arguably the most cash in your pocket.
To make sure you are prepared, have an exit strategy and clear milestones to indicate when you intend to exit. Learn what it takes to exit your business and transfer ownership; there are legal issues and traps to watch out for. The important thing is to know when to make a controlled exit on your own terms.
The Next Question After You Decide To Sell
There have been many founders forced out of companies because they overstayed their welcome. Being the right person to found and build a business is not necessarily the same person to care for the day-to-day operations in the long run. Even when founders remain as beloved bosses and effective managers, there may come a time when they get bored or have a new idea that will take all of their time.
If you do decide that you are ultimately going to sell, the next question is a matter of when you should do so. It’s a very important question because getting it wrong can be very expensive. The reason owners often sell at the wrong time is the twin monsters that have been ruining stock traders and gambler forever: Fear and greed. Unfortunately, the psychology of theses two demons is that they will cause you to do exactly the opposite of what you should do.
When value is clearly going up, greed temps you to hold out for more. When value is low and falling fear drives you to jump out just before the value hits the lowest point and rebounds. The fact is, you can’t hit a moving target; you need to have a specific fixed target in mind that is good enough and when the value goes above it you have to let go. (Not as easy as it sounds by the way!) The temptation is always that there will be more. You have to realize that the value is not real until it is in your pocket.
Planning For An Exit
If you don’t already have a clear plan for exiting by selling your gym you should develop one. You need to determine at what point you will be making the decision to get out. Once the value of your business is above that level be prepared to take action.
Once you have created your exit plan you need to lay the groundwork. This should be a matter of housecleaning and accounting. Of course you will want to tidy up and make your gym presentable but when you sell a business the one thing most in need of attention is the bookkeeping. Get your accounts in order for the finances and also the accounts for the membership. Any serious buyer is going to have accountants and attorneys go through your books with the proverbial fine-toothed comb.
The right time to sell is after you have all of the books and accounts sorted out. To legally sell a business you have to take great care to follow all of the correct procedures and forms. Talk with your attorney, a business transfer consultant or a business broker about the timeframe and fees involved. There are some very specific aspects to selling a business concerning confidentiality, due diligence, preparation for legal transfer and avoiding some very deep potholes. It always pays to have professional advice.
Perhaps you are ready to sell now or maybe you have an idea you might want to retire some day. Once you make either of these your goal you are going to need to get organized. The more time you have the more prepared you will be when the day finally arrives. Business is not about profit, it’s about value and with a good exit plan in place you can get the it, once you have passed your target.